EU OKs Apple e-books offer

The acceptance by European antitrust regulators Thursday of a settlement with Apple and four publishers in an e-book price-fixing case may spur ongoing talks in a parallel case working its way through the U.S. courts, knowledgeable sources told POLITICO.

Apple joined publishers Hachette Livre, Harper Collins, Simon & Schuster and Macmillan in making the deal with the European Commission on Thursday, while Pearson, parent company of publisher Penguin, continues to negotiate with regulators, according to a release from the EU.

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In the U.S., the Department of Justice is still prepping for trial over an alleged e-book price-fixing conspiracy against Apple and two publishers, Penguin and MacMillan. Three other publishers — Simon & Schuster, Hachette and HarperCollins — already settled with DOJ. The case is now in discovery mode but a knowledgeable source told POLITICO that the parties have been in discussions over a possible settlement in the U.S.

The European settlement and other factors — including the pending sale of Penguin to Random House, which was not involved in the suit — may provide impetus for a settlement with DOJ.

As part of the European deal, Apple and the four publishers agreed to terminate the current agency agreements that were being investigated, refraining for two years from preventing retailers from setting their own e-books prices or offering discounts or promotions and for five years of refraining from making any e-books agreements with “most favored customer” clauses, the commission said.

Though the EU could have pursued fines at the end of a lengthy process, the statement by commission Vice President Joaquin Almunia said, the agreement seemed to be a better solution “in the case of a nascent and very fast-moving market.”

“Accepting these commitments means removing immediately the results of the collusion and restoring normal competitive conditions. This route is the quickest way to bring competition back to this market, to the benefit of all consumers who buy e-books in Europe,” said Almunia, who is Europe’s top antitrust regulator.

The EU and U.S., along with several state attorneys general, accused Apple and e-book publishers of colluding in 2009 to set a minimum price of e-books to undercut Amazon’s ability to sell the e-books at lower rates. The publishers, allegedly after discussions with Apple, in 2010 collectively switched to using an agency model of price-setting, in which the publisher sets the price for e-books, and ceased to use a wholesale model, in which the retailer sets the price. The five also granted Apple “most favored customer” status, which prevented other retailers from selling e-books for lower prices than on Apple’s iBookstore.

The European development is regarded as a win for Amazon, which has sought to price e-books lower than competitors to gain market share for its Kindle book reader.

Apple and Amazon did not immediately respond to requests for comment.

This article first appeared on POLITICO Pro at 9:27 a.m. on December 13, 2012.